"I have the impression that many people, whether in the business sector, the financial markets, or in academic and political circles, think that the post-crisis world will be quite similar to the pre-crisis one in 2006-2007. In other words, they expect the economic recovery to bring us back to where we were before the crisis.
My feeling is that those who think like that are deluding themselves. The pre-crisis situation was not in equilibrium. It was not sustainable. The crisis occurred precisely because the situation was unsustainable, both within certain countries and globally.
If the world economy were to return to the pre-crisis situation, within a short time span a new crisis would be likely to occur because the same imbalances that led to the crisis would build up again. Considering some recent developments and behaviour, and considering the way certain policies are being discussed and the thinking of some key players, such a scenario does not seem that unlikely.", Lorenzo Bini Smaghi, Member of the Executive Board of the ECB, 18 January 2010
Another way to think of what has been said is to consider that the growth from 2003-2007 was based on illusion , an economy fuelled by an ever increasing amount of private debt that ultimately inflated all possible assets.
Well, my point is if 2003-2007 GDP growth, wealth creation was based on an illusion, what to think about housing price growth during that period?...
Well, overall private wage are sharply falling (unemployment, furlough, bonus etc..), GDP has been on free fall in Finland wiping out the gain made during the period 2005-2007, interest rate is almost zero and has only one way to go...on top of that the economical situation's strengh is based on temporary measures (monetary and fiscal)...so you still think that price will go higher. Well my forecast for seeing a deflation of housing price in the next 2-3 years by about 30% (minimum) has never been so probable...